EUR/USD: Euro may have a chance for a correction
Data released on the US economy in the second half of the day led to an increase in the US dollar against risky assets, including against the pound and the European currency. Considering that the European Central Bank expressed concern yesterday about the future rates of economic growth but did not reconsider its attitude toward monetary policy. The upward trend in the US dollar is likely to continue but it is subject to positive reports today, assessing US GDP growth for the 3rd quarter.
Economists expect GDP in the 3rd quarter to grow by 3.4% per annum but some experts predict that in the 4th quarter. The GDP growth will slow to levels below 3%.
According to a report by the US Department of Labor, the number of Americans who have filed new applications for unemployment benefits has increased. Hence, for the week from October 14 to October 20, the number of Americans who first applied for unemployment benefits increased by 5,000 and reached 215,000. Economists expected the number of applications to be 214,000. influenced the number of applications.
A good report on the growth of demand for durable goods in the United States supported the US dollar. The demand was caused by a sharp increase in orders for military aircraft.
According to the US Department of Commerce, total orders for durable goods increased by 0.8% in September this year compared with the previous month. The demand was caused by a sharp increase in orders for military aircraft.
As I noted above, the main increase was orders of military aircraft and spare parts, where the increase was 119.1% compared with the previous month. There was a decrease of 0.6%, excluding defense orders, while orders excluding transport equipment rose by 0.1%.
The number of signed contracts for the sale of housing increased in September compared with the previous month. However, this still does not indicate an improvement in the situation in the US housing market, where there is a very serious fall due to the rising cost of borrowing and high prices.
According to the National Association of Realtors, the index of signed contracts for the sale of housing in September rose by 0.5% compared with the previous month and amounted to 104.6 points. Economists had expected sales to remain unchanged. Compared to the same period of the previous year, the index in September fell by 1.0%.
Production activity in the area of responsibility of the Fed-Kansas City has decreased. According to the data, the composite manufacturing index of the Fed-Kansas City was 8 points in October against 13 points in September.
As for the technical picture of the EUR/USD pair, a lot will depend on the report on the growth rate of the US economy today. If the data coincide with economists’ forecasts or turn out to be worse, the pressure on the dollar will increase, which will lead to an upward correction in the trading instrument. The breakthrough of the resistance at 1.1390 will hit a series of stop orders of euro sellers and will allow you to return to yesterday’s highs around 1.1430, where the week may close. If the pressure on the euro increases, all hope will be on the support level in the area of 1.1335. A breakthrough of which will collapse the trading pair already to the lows of August this year in the range of 1.1300.